AI Drafter 
TaxTMI 
TaxTMI 
2016 (10) TMI 753
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....' for short], the Government of India had framed Foreign Trade Policy 2009-14. Under such policy, the Government of India framed a Focus Product Scheme ['FPS' for short] which envisaged granting of duty credit scrip equivalent to 2% of the FOB value of exports of notified products mentioned in Appendix-37-D which were made from 27.08.2009 onwards. Relevant portion of this scheme reads as under: "3.15 Focus Product Scheme (FPS) 3.15.1 Objective Objective is to incentivise export of such products which have high export intensity/employment potential, so as to offset infrastructure inefficiencies and other associated costs involved in marketing of these products. 3.15.2 Entitlement Exports of notified products (as in Appendix 37D of HBPv1) to all countries (including SEZ units) shall be entitled for Duty Credit scrip equivalent to 2% of FOB value of exports (in free foreign exchange) for exports made from 27.08.2009 onwards, unless a specific date of export/period is specified by public notice/notification." 3. Appendix 37-D contained a list of notified products for the purpose of FPS. Entry 242 thereof reads as under: Sr. No FPS Product Code ITC....
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....ree foreign exchange, whichever is less, unless otherwise specified." 6. Corresponding Appendix 3B contains various entries. Relevant for our purpose is Entry No. 4097 and reads as under: Sr. No HS Code ITC(HS) Code Description of goods MEIS-Reward Rate (in %) Country Group Code A Country Group Code B Country Group Code 2 4097 84807900 Other Moulds For Rubber/ Plastics 3 3 0 8481 Taps, Cocks, Valves and Similar Appliances for pipes, boiler shells, tanks, vats or the like including pressurereducing valves and thermostatically controlled valves 7. On 14.12.2015, the DGFT issued the impugned trade notice which reads as under: "The product description appearing under ITCHS 8481 mentioned at Sr.No. 269 of Appendix 37-D, Table-1, of Foreign Trade Policy 2009-14 notified vide public notice No. 52 dated 25.02.2014 is as under: 'Items of a kind used on bicycles: Taps, Cocks, Valves and similar Appliance for pipes, boiler shells, tanks, vats or the like including pressure-reducing valves and thermostatically controlled valves' 2. DGFT has received repre....
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.... notice as well as the action of the respondents in blocking the petitioners' applications for export incentives under the MEIS scheme. 10. Appearing for the petitioners, learned counsel Mr. Dave raised following contentions: (i) The clarification made in the impugned trade notice cannot apply with retrospective effect and to cases which were closed long back; (ii) Through the trade notice, in the guise of clarification, the authorities cannot change the very essence of the entry in question. It was contended that in taxing matters, the purpose or intention behind a certain provision is wholly irrelevant. What is to be seen is the true interpretation flowing from the plain language of the provision; (iii) Counsel further submitted that the heading of the Entry 242, which was later on renumbered as 269, created a confusion. Such heading was 'Items of a kind used on bicycles'. The language used in the entry did not fit this description and this mismatch was, later on, corrected in the MEIS where the entry was retained as it is, but the title 'Items of a kind used on bicycles' was deleted. (iv) Counsel submitted that the true intention can be gathere....
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....g in the said description, are not eligible for the benefit. 13. In our opinion, the circular does not simply provide for a clarification. It goes much further and essentially seeks to amend the entry itself. In the impugned trade notice itself it was recognized that the entry contained several parts which were not bicycle parts. If that be so, a question would immediately arise, what would be utility of mentioning several other parts in the said entry. In other words, if the impugned circular is seen as merely a clarificatory circular, several parts mentioned in the entry would be rendered otiose. In fact, virtually, the entire entry would be rendered meaningless. 14. We are conscious that this entry contained a heading "Items of a kind used on bicycles". However, the main body of the entry contained predominantly parts which were not possible of being used on bicycles. These are taps, cocks, valves and other appliances for pipes, boiler shells, tanks, vats or the like. As per the entry, this would include pressure reducing valves and thermostatically controlled valves. Various parts mentioned in the first part of the entry ex facie are not useful on bicycles. The later part....
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....rpretation sought to be given by DGFT in the clarificatory circular cannot be accepted. 18. We are not doubting the power of the DGFT to issue such a circular. The Foreign Trade Policy 2009-14 itself contained an interpretation Clause 2.3 which recognized that if any question or doubt in respect of interpretation of any provision contained in the policy arises, the DGFT would be an appropriate authority to make necessary clarification whose decision shall be final. To ensure uniformity and to avoid divergence of opinions, DGFT could as well exercise such powers and clarify the stand of the Government when a particular entry or provision of the scheme is capable of two interpretations. This would only ensure that all authorities under the DGFT would implement the scheme uniformly. This in turn will bring about greater consistency and predictability. However, a clarification cannot run counter to the plain interpretation of the provision and in guise of clarification, an entry cannot be amended. The power to amend an entry would be with the Government of India. 19. In case of Malik Tanning Industries (supra) the High Court held that the DGFT would no have power to issue circula....